Annual U.S. earthquake losses estimated at $4.4B

California damage at $3.3 billion, but many vulnerable cities are in other states

On September 20, the Federal Emergency Management Agency (FEMA) reported that earthquake losses in the United States add up to about $4.4 billion dollars annually. This study was based on a new methodology to estimate earthquake risk and future losses by geographic area. Released at the National Earthquake Risk Management Conference in Seattle, WA, this study is the first national study of earthquake risk across the United States.

According to the study, 84 percent of the nation's annual losses are expected to occur in California, Oregon and Washington, with California alone accounting for $3.3 billion of the estimated damage costs. Earthquake loss estimates are annualized to factor in historic patterns of frequent smaller earthquake events with infrequent but larger events.

The $4.4 billion estimate is extremely conservative and includes only capital losses ($3.49 billion) and income losses ($0.93 billion). It does not cover damage and losses to critical facilities, transportation and utility lifelines or indirect economic losses. While most estimated losses are in California, Oregon and Washington, distribution of earthquake risk is much broader. Relatively high earthquake loss ratios exist throughout the western U.S., the central U.S. within the New Madrid Seismic Zone and the Charleston, S.C., area.

The high risk and high projected losses for urban areas in California are because of the combination of high seismic hazard and relatively high economic exposure, which also apply for Seattle and Portland, according to the study.

In addition to California metropolitan areas, cities ranked among the top 40 high-loss potential urban areas include Seattle, Portland, New York, Salt Lake City, St. Louis, Tacoma, Las Vegas, Anchorage, Boston, Reno, Memphis, Charleston, S.C., Albuquerque, Newark, Honolulu and Atlanta. In terms of vulnerability, Hilo, Anchorage, Reno, Portland, Seattle, Tacoma, Salt Lake City, Charleston, S.C., Provo, Las Vegas, Albuquerque, Memphis, St. Louis, Honolulu, New York, Newark, Atlanta, Boston and Philadelphia are on the top 40 list.

Risk linked to earthquakes has risen
"While seismic hazard in the United States has remained fairly constant over the years, seismic risk has been increasing substantially," FEMA Director James Lee Witt said. "That's because of the increase of urban development in seismic hazard areas and the vulnerability of older buildings, some of which were not built to adequate seismic code."

The study indicates that probable annual earthquakes losses in the United States are almost equal to the losses experienced from floods and hurricanes. Annual flood losses totaled $5.2 billion during 1989 to 1998, according to the National Weather Service. The National Climatic Data Center estimates $5.4 billion in annual hurricane losses for the period.

FEMA building scientists and seismologists used an earthquake loss estimation methodology called Hazards U.S. (HAZUS), developed by the agency in cooperation with the National Institute of Building Sciences. HAZUS technology uses an integrated Geographic Information System (GIS) platform that produces regional profiles and estimates of earthquake loss by geographic area, and addresses the built environment and categories of losses in a comprehensive manner.

Computer-based methodology covers the entire United States
Mathematical formulae are used by the computer-based methodology, as well as information about local building inventories, geological conditions, economic data, location and size of potential earthquakes, and other data to estimate losses. The system can specify areas of potential or actual damage and degree of damage in areas as small as the census track level based on the magnitude of the seismic activity and information that has been input into the system on building inventory.

"This new earthquake loss estimation system is the first of its kind in that its methodology utilizes probability factors rather than depending on actual historical data alone to estimate future losses from earthquakes," Witt said. "FEMA plans to expand the methodology and develop new models for estimating potential losses for other natural disasters as well, including high wind events and coastal and riverine flooding."

Two interrelated parameters were used in the study to characterize seismic risk: average annualized earthquake loss and annualized earthquake loss ratio. The annualized loss estimate addresses two key components of seismic risk - the probability of ground motion and the consequences of that motion on the area. To estimate risk or vulnerability, FEMA scientists used the ratio of estimated losses as a percentage of the replacement value of the area's total building inventory. Thus risk or vulnerability is calculated in terms of estimated earthquake loss in relation to the size of the community. For example, $10 billion in earthquake damages in Evansville, IN, would represent a more significant impact on the area than a comparable dollar loss in Los Angeles.

Study can help planners and policy makers make more informed decisions
The study represents an important benchmark in a long-term FEMA effort to analyze, rank and compare seismic risk across regions in the United States. The information from the study can provide policy makers and planners with a nationally consistent approach that will help them understand the complexity and dynamics of risk, how levels of risk can be measured and compared, and the multitude of factors that influence risk.

"We hope that we can convince state and local policymakers to adopt and enforce seismic building codes in regions of the United States that experience infrequent but damaging earthquakes," Witt said. "In addition, the information provided in this study should become an integral component of a national seismic risk baseline, aggregated at the metropolitan, state and regional level to support options and actions to reduce seismic risk in the United States."

Through FEMA's Project Impact, an initiative launched in 1997, communities with earthquake risks are encouraged to plan and implement programs to address the risk and prevent damage from disasters. Project Impact communities foster private-public partnerships and initiate public outreach, mentoring and mitigation projects that implement disaster damage prevention measures.

To date, some of the cities at greatest risk have been designated Project Impact communities, including Oakland, Hilo, Charleston, Reno, Anchorage, Salt Lake City, Portland and Seattle. FEMA will work with the other urban areas at high risk for earthquakes to implement disaster resistance programs and encourage them to become Project Impact communities.

The full report, HAZUS 99: Average Annual Earthquake Losses for the United States, is available on FEMA's Web site at Paper copies of this study will be available in mid-October and can be obtained by calling FEMA publications at 1-800-480-2520.

Edited by Bob Arguero, Managing Editor, GovCon